By Aaron Gadiel, Partner
The NSW Government has now published the legal text for its new Low and Mid-Rise Housing Policy. The legal document generally implements the Government’s announcement of 21 February 2025, but there are a few twists along the way.
The legal changes are implemented in via the State Environmental Planning Policy (Housing) Amendment (Low and Mid Rise Housing) 2025. This document was published on 28 February 2025 and came into effect immediately.
Apparently, two new statutory maps have also been approved. These are
At the time of writing this article, these two maps had not been published. We expect that they will be published on the NSW Planning Portal’s ‘Spatial Viewer’ shortly. When they are published, it is likely that they will join the maps listed under the heading ‘SEPP (Housing) 2021’ under the heading ‘State Environmental Planning Policies’.
The new Low and Mid-Rise Housing Policy is being implemented via a new Chapter 6 (‘Low and mid rise housing’) in the State Environmental Planning Policy (Housing) 2021 (the Housing SEPP).
The new rules are not simple.
The NSW Government has been pursuing multiple policy initiatives which deliver blanket uplifts in development potential near transport hubs.
Confusingly, many of these policies sound similar (and work in similar ways).
One of these policy initiatives is described as the Low and Mid-Rise Housing Policy. It is separate (but sounds similar to) the ‘transport oriented development’ policy initiative.
The intention to introduce the Low and Mid-Rise Housing Policy was announced in November 2023. The policy was described as ‘new planning rules to fast track low and mid-rise housing’.
The Government said that these rules would ‘fast-track a greater diversity of homes like residential flat buildings of 3-6 storeys, terraces, townhouses, duplexes and smaller 1-2 storey apartment blocks in suburbs where they are not currently allowed’.
The Government formally exhibited the proposal from December 2023 to February 2024.
The ‘Explanation of Intended Effect: Changes to create low-and mid-rise housing’ was not drafted with legal precision. It was a non-legal outline of the proposals.
Mills Oakley published an article on the public exhibition proposals at the time.
The Government has formulated and published the legal text for the new Low and Mid-Rise Housing Policy. It is now in effect.
The new provisions fall short of what was originally proposed. These changes have been outlined (and criticised) by the Urban Taskforce.
This article does not focus on the difference between what was originally proposed and what has actually been introduced. Instead, we have addressed some key features of the final reforms — from a property developer’s perspective.
In broad terms, the new provisions work with reference to three different defined areas:
The two ‘low and mid rise housing’ areas
The ‘low and mid rise housing inner area’ is defined as any of the following:
The ‘low and mid rise housing outer area’ is defined as any of the following:
‘Walking distance’ means the shortest distance between two points. This distance must be measured along a route that may be safely walked by a pedestrian using, as far as reasonably practicable, public footpaths and pedestrian crossings.
These walking distances are not subject to any statutory mapping. That is, no statutory maps have been prepared that actually sets out the boundaries of the two ‘low and mid rise housing’ areas.
The Department of Planning, Housing and Infrastructure has published an ‘indicative map’. However, this map has no legal status and does not purport to be reliable.
If developers want certainty, they will need to work out where the ‘low and mid rise housing’ areas are for themselves. Ultimately, for marginal cases, it may be necessary for a surveyor to precisely calculate walking distances.
The new provisions do not expressly say what happens when only part of a development site is within the 400-metre or 800-metre walking distance.
The list of nominated railway, metro or light rail stations is as follows:
The mapped town centres — that can separately trigger a site’s inclusion in one of the two ‘low and mid rise housing’ areas — are not listed in the text of the new Housing SEPP provisions. Instead, these areas are shown on the Town Centres Map (which was not available at the time that this article was written).
However — according to the non-legal summary of the changes published by the Planning Department — the following town centres are mapped:
Excluded land
There are some sweeping exclusions from the new provisions.
In brief terms, the new provisions do not apply to:
This means that, in truth, any accurate mapping for the new provisions will resemble a piece of Swiss cheese. That is, there will be many arbitrary holes where the new provisions do not apply.
While sites that are listed as ‘heritage items’ are excluded, there is no wider exclusion for heritage conservation areas as a whole. We will return to this point shortly.
Developers considering potential sites will need to work through the above exclusion list for each site.
In this article, a reference to a ‘low and mid rise housing’ area is a reference to only that part of any area that has not been cut-out as a result of the exclusions. A developer must not overlook the need to check whether any of the exclusions might apply to any site.
Where are the three land categorisations relevant?
The ‘low and mid rise housing inner area’ and ‘low and mid rise housing outer area’ are relevant for certain new provisions concerning:
Certain provisions for dual occupancies and semi-detached dwellings apply to the whole state (subject to the exclusions).
However, it should be appreciated that the new provisions are also limited to land with particular zones. So, for example, land that is in a commercial core or mixed-use zoning will not be subject to the new provisions — even if it is within a ‘low and mid rise housing’ area.
We outline the zones in which the reforms do apply, below. (Again, do not forget that, even if the land is in a relevant zone, the application of the reforms is still subject to the exclusions listed above.)
On 1 July 2024, the NSW Government implemented the ‘first stage’ of the ‘low- and mid-rise housing’ reforms. Mills Oakley published an article on the changes at the time.
Those provisions overrode some prohibitions on the development of dual occupancies and semi-detached dwellings in the ‘R2 Low Density Residential’ zone in local environmental plans. This applies to any land zoned ‘R2’ in the state, subject to the exclusions listed above.
The new provisions re-enact this reform, but also expand upon it in the two new ‘low and mid rise housing’ areas.
Firstly, a new requirement is introduced for all dual occupancies in the following zones within ‘low and mid rise housing’ areas:
Before granting development consent, the consent authority is required to consider a new Tree Canopy Guide for Low and Mid Rise Housing.
The requirement to consider this new guide applies to dual occupancies on the above land — even dual occupancy would have previously been permissible in the relevant zone.
The guide sets out tree canopy and deep soil expectations.
The guide does not impose binding rules, but a developer would typically be expected to comply with the numerical standards in the guide unless there are good reasons not to.
Secondly, in the same four zones listed above, a series of ‘non-discretionary development standards’ are established in ‘low and mid rise housing’ areas for dual occupancies.
The label ‘non-discretionary development standards’ is misleading. Non-discretionary development standards are typically welcomed by developers. The purpose of such development standards is to set out standards that — if complied with — prevent the consent authority from requiring more onerous standards for those matters.
This effectively can override inconsistent standards set out in a local environmental plan or development control plan.
We consider that non-compliance with such standards does not prevent development consent from being granted.
In short, our view is that these development standards limit the discretion of the consent authority, but do not limit the freedom of the developer.
The following non-discretionary development standards are available for use by a developer for dual occupancies, in the R1-R4 zones, in the ‘low and mid rise housing’ areas:
These non-discretionary standards are a helpful addition to the ‘first stage’ of the reforms implemented in July last year. A problem with those reforms is that dual occupancies were made permissible in many R2 zones, without any adjustment to the floor space ratio.
Typically, when a local council wants to facilitate dual occupancies in low density residential areas, it will establish a special, higher, floor space ratio for that development type. (The floor space ratio in a R2 zone can easily be 0.5:1 or lower.) The state’s ‘first stage’ reforms overlooked the need for a floor space ratio adjustment. This has now been addressed (but only in the ‘low and mid rise housing’ areas).
Thirdly, in zones R1-R3, a series of ‘non-discretionary development standards’ are established in ‘low and mid rise housing’ areas for subdivision for the purposes of dual occupancies. Strata subdivision is excluded.
These ‘non-discretionary development standards’ are only available if:
The following non-discretionary development standards are available for use by a developer for (non-strata) subdivision for dual occupancies, in the R1-R3 zones, in the ‘low and mid rise housing’ areas:
There are several changes relevant to:
‘Multi dwelling housing’ is defined to mean three or more dwellings (whether attached or detached) on one lot of land, each with access at ground level. The definition excludes residential flat buildings.
‘Multi dwelling housing (terraces)’ is a type of ‘multi dwelling housing’ where all dwellings are attached and face (and are generally aligned along) one or more public roads.
An ‘attached dwelling’ means a building containing three or more dwellings, where:
Firstly, the new provisions make ‘multi dwelling housing’ and ‘attached dwellings’ permissible (with development consent) on R2-zoned land within a ‘low and mid rise housing’ area.
Secondly, again, in R1-R4 zoned land — in a ‘low and mid rise housing’ area — the consent authority is required to consider the Tree Canopy Guide for Low and Mid Rise Housing before granting development consent to ‘multi dwelling housing’ or ‘multi dwelling housing (terraces)’
The requirement to consider this new guide applies to all ‘multi dwelling housing’ and ‘multi dwelling housing (terraces)’ on the above land — even though such housing would have previously been permissible in the relevant zone.
(As we explained earlier, the guide does not impose binding rules, but a developer would typically be expected to comply with the numerical standards in the guide unless there are good reasons not to.)
Thirdly, the following non-discretionary development standards are now available for use by a developer for ‘multi dwelling housing’ in the R1-R4 zones, in the ‘low and mid rise housing’ areas:
Fourthly, the following non-discretionary development standards are now available for use by a developer for ‘multi dwelling housing (terraces)’ in the R1-R4 zones, in the ‘low and mid rise housing’ areas:
Finally, the following non-discretionary development standards are now available for use by a developer for the subdivision of ‘multi dwelling housing (terraces)’ in the R1-R3 zones, in the ‘low and mid rise housing’ areas:
These ‘non-discretionary development standards’ (for subdivision) are only available if:
These subdivision non-discretionary standards are not available for strata subdivision.
There are several changes relevant to:
Firstly, the new provisions make residential flat buildings permissible (with development consent) on R2 and R3-zoned land within a ‘low and mid rise housing’ area.
Secondly, in R3-R4 zoned land — in a ‘low and mid rise housing’ area — before granting development consent to residential flat buildings or shop top housing, the consent authority is required to consider the Tree Canopy Guide for Low and Mid Rise Housing.
The requirement to consider this new guide applies to all residential flat buildings or shop top housing on the above land — even though such development would have previously been permissible in the relevant zone.
Thirdly, there are new storey controls that will apply to all residential flat buildings and shop top housing in R3-R4 zoned land in a ‘low and mid rise housing’ area.
In the ‘low and mid rise housing inner area’:
In the ‘low and mid rise housing outer area’ a consent authority must be satisfied that residential flat buildings with a building height of up to 17.5 metres have four storeys or fewer.
Normally a planning control in the Housing SEPP is taken to be using defined terms in the ‘Standard Instrument’.
A ‘storey’ is defined in the ‘Standard Instrument’ as:
A ‘storey’ does not include:
This definition includes storeys even if they are below ground.
For this reason, we would normally expect to see an express carve-out in a storey control that excludes storeys that are basement levels. For example, section 144(3)(b) of the Housing SEPP applies the Apartment Design Guide to a building of at least three storeys, but expressly excludes ‘underground car parking storeys’.
We suspect that the failure to exclude basement levels from the new six-storey and four-storey controls is an oversight. We trust the Planning Department will quickly move to correct this apparent error. If such a change is not made, there will likely be many disputes with local councils about whether the ‘Standard Instrument’ definition applies in this case.
More generally, we observe that these new storey controls are capable of being contravened under clause 4.6 of local environmental plans (or equivalent provisions). (Of course, this would require an appropriately prepared clause 4.6 statement that presents a strong case for a contravention.)
Thirdly, the following non-discretionary development standards are now available for use by a developer of residential flat buildings and shop top housing in the R1-R2 zones, in the ‘low and mid rise housing’ areas:
Fourthly, the following non-discretionary development standards are now available for use by a developer of residential flat buildings and shop top housing in the R3-R4 zones, in the ‘low and mid rise housing inner areas’:
Fifthly, the following non-discretionary development standards are now available for use by a developer of residential flat buildings and shop top housing in the R3-R4 zones, in the ‘low and mid rise housing outer areas’:
Finally, a requirement specified in:
in relation to minimum lot size and/or minimum lot width will not apply to residential flat buildings and shop top housing (in the R3-R4 zones in a ‘low and mid rise housing’ area) that meets all of the applicable non-discretionary development standards above.
There may be complications when residential flat buildings or shop top housing when they are developed on land that is already the site of a building with an excavated basement.
Where there is an existing building, the Land and Environment Court’s current practice is to measure building height from the base of any excavated basement. When strictly applied, this means that the permitted building heights can significantly vary within an area (subject to the same nominal maximum building height). This is due to the absence or presence of differing extents of basement excavation for existing buildings.
The Court has accepted that the prior excavation of the site — within the footprint of the existing building — which distorts the height of buildings development standard plane overlaid above the site when compared to the topography of the land, can be an environmental planning ground that may justify a contravention under clause 4.6 of a local environmental plan (Merman Investments Pty Ltd v Woollahra Municipal Council [2021] NSWLEC 1582 at [74]).
However, the relationship between the new state-imposed controls and the local controls is already intricate. The introduction of clause 4.6 request(s) to deal with excavated basements for existing buildings in the ‘low and mid rise housing’ areas will be an unwelcome complication.
The Planning Department has released advice that says:
Projects will not be automatically approved. Council must still conduct a merit-based assessment. Nothing stops council from assessing heritage significance [in a heritage conservation area] as well as matters like building materials and colours, front and side setbacks, amount and location of landscaping and gardens, streetscape character location of car parking, subdivision pattern and the bulk and scale of buildings. These are all matters that would be part of a merit assessment and if the impact of new development was unacceptable council can refuse a DA … If the DA meets all the standards and there are no unacceptable impacts, then it should be approved.
The Department cannot re-write the law through such advice.
In our view, the advice is only partially correct.
The advice glosses over the legal effect of non-discretionary development standards. For example, we consider that the discretion to take into consideration the bulk and scale of a building will be limited when a development complies with applicable height and floor space ratio non-discretionary development standards.
The Department also says in the same advice:
It remains the case that any DA proposal, including changes to existing buildings, must maintain or enhance the heritage value of the [heritage conservation area] in order to be approved.
We think that the Department is wrong to say that a development ‘must’ maintain or enhance the heritage value of a heritage conservation area.
It is true that this is ordinarily the approach that a consent authority (and the Land and Environment Court on appeal) would take. However, the legal obligation of the consent authority under clause 5.10(4) of a ‘standard instrument’ compliant local environmental plan is merely to consider the effect of the proposed development on the heritage significance of the item or area concerned.
Despite the advice of the Department, it is legally open for a development applicant to argue that greater weight be given to the aim of Chapter 6 of the Housing SEPP relative to matters that may arise in relation to the heritage conservation area.
In this regard, the aim of Chapter 6 of the Housing SEPP is to ‘encourage the development of low and mid rise housing in areas that are well located with regard to goods, services and public transport’.
Ultimately, a holistic decision will need to be made in relation to development in heritage conservation areas — taking into account any competing planning considerations. It may be that, in some cases, the public interest may be best served by giving primacy to the aims of Chapter 6 of the Housing SEPP. This is an issue that will likely need to be considered by the Land and Environment Court.
One of the other recent initiatives introduced by the NSW Government has been a new ‘infill affordable housing’ scheme. Mills Oakley published an article about this scheme in December 2023.
In brief terms, the scheme permits extra floor space ratio and extra height if certain criteria are met, in particular where a proportion of the development is set aside to be used exclusively as affordable housing for at least 15 years.
In its published explanation of the latest changes, the Planning Department says this:
The existing in-fill affordable housing bonus provisions will continue to apply to land where the Low and Mid-Rise Housing Policy applies. This means the bonus provisions will apply on top of the non-discretionary standards. This is to encourage affordable housing to be delivered in the local low and mid-rise housing areas.
As things stand today, this explanation is incorrect.
The infill affordable housing incentive scheme does not apply unless the development is permitted with consent under either:
This is set out in section 15C(1)(a) of the Housing SEPP.
This provision has not been amended.
This means that the state-level infill affordable housing incentives will not apply to
that are only permitted because of the new Chapter 6 (‘Low and mid rise housing’) of the Housing SEPP.
Furthermore — even when the incentive provisions apply (because, say, the development is already permissible under the local environmental plan) — the potential additional floor space ratio and height are calculated with reference to:
The Housing SEPP defines the expression ‘maximum permissible floor space ratio‘ to mean:
The definition of the expression ‘maximum permissible building height’ is in similar terms.
Notably, there is no reference to the new Chapter 6 (‘Low and mid rise housing’) of the Housing SEPP in either definition. These definitions have not been amended.
Accordingly, when the state-level infill affordable housing incentives apply, they will not be calculated with reference to the non-discretionary floor space ratio and height standards in Chapter 6.
If this is an oversight by the Planning Department, we hope that it is quickly corrected.
One of the reasons that the NSW planning system is so complex is the many inconsistencies between different planning documents.
The situation persists, in part because:
This tends to mean that whenever the NSW Government takes decisive action to actually implement planning controls to meet the broader community interest, the planning controls often take the form of state-level controls. Such state controls either:
local controls.
Regretfully — whether for political reasons, or issues of time and resources — the efforts of the NSW Government often are less than satisfactory.
In the present case, some local controls will clearly be overridden, but others are (at least nominally) left in place.
For example, the changes allow local councils to argue that developers must still comply with setback provisions in development control plans. However, where those setbacks would prevent a developer from materially achieving the planned intensity under the new ‘non-discretionary’ development standards, it may be legitimate for the developer to argue that the development control plan is working against the policy aim of Chapter 6 of the Housing SEPP.
Regretfully, if such arguments are to be made, they will need to be advanced on a site-by-site basis — with each case turning on its own merits. It is unlikely that any single Court decision could resolve this issue across the board.
Whilst, overall, the Low and Mid-Rise Housing Policy is a very positive measure, it is disappointing that the NSW Government has been unwilling, or unable, to cut through local controls, such as setbacks and heritage conservation area restrictions, to clearly and consistently establish standards on which developers can rely.
If you would like further information or have any queries regarding other matters, please do not hesitate to contact:
